The crisis at Northern Rock claimed its first victim yesterday when Matt Ridley, chairman of the Newcastle-based bank, resigned three days after MPs accused him of "clinging to office".

In a statement to the Stock Exchange, the Northern Rock board said "the time was right" for Mr Ridley to step down and announced that he will be succeeded by Bryan Sanderson, a former chairman of Standard Chartered Bank and Bupa. He was also a main board director of BP.

Mr Ridley's departure comes a month after the funding crisis that has engulfed Northern Rock exploded into the public arena and caused the first run on a bank in Britain for more than a century.

Northern Rock - which has been forced to borrow £16bn in emergency funding from the Bank of England - said Mr Ridley had volunteered to resign last month, but that the board had asked him to stay in place "until the new funding arrangements were in place" and until he had represented Northern Rock before MPs at the Treasury select committee hearing earlier this week. It is understood that Mr Sanderson was approached to take over last week and Mr Ridley knew he was about to step down when he appeared before MPs.

John McFall, chairman of the select committee, said last night that Mr Ridley's departure was inevitable after his poor performance in front of MPs and called on the new chairman to sack other directors. "The resignation of Matt Ridley came as no surprise after the woeful performance of the board at the committee hearing," he said. "I welcome the appointment of Bryan Sanderson. However, for the sake of the Northern Rock depositors, employees and the wider community in the north- east, the new chairman must move swiftly to strengthen and renew the board."

His comments were echoed by the Liberal Democrat shadow chancellor, Vince Cable. He said the government "should have made Mr Ridley's departure a condition of its loan, rather than waiting for him to go". Mr Cable, who is also acting leader of his party, added: "There are other directors, including Derek Wanless [head of the bank's risk committee], who are equally culpable. All of the senior management of the company led by Mr Applegarth [Northern Rock's chief executive] should have been cleared out on day one."

Mr Ridley's resignation will take effect as soon as Mr Sanderson is officially approved by financial regulators. Last night it was unclear whether Mr Ridley, who was paid £315,000 a year, will receive a pay-off. The bank refused to say how much Mr Sanderson will be paid, but said it would be in line with other non-executive chairmen of UK banks. On that basis it is likely to be around £500,000 a year.

At the select committee last week, when the bank's bosses said that all the directors had offered their resignations, MPs accused Mr Ridley of "damaging the good name of British banking". The directors, however, said the bank had been hit by an unforeseeable credit crunch. Mr Ridley described the problems the bank had faced as "an unpredictable concatenation of events".

A journalist and geneticist by profession, Mr Ridley joined the board of Northern Rock in 1994. His father, Viscount Ridley, was also chairman of Northern Rock.

Profile: Bryan Sanderson

Bryan Sanderson has all the right north-east business grandee credentials deemed necessary to take over at Northern Rock. However, some might say that as a former chairman of Sunderland football club he lacks the vital qualification of being a Newcastle United supporter, the team sponsored by the ailing bank.

Born in 1940 in County Durham, Mr Sanderson graduated from the London School of Economics and joined BP, becoming a main board director. Aged 60 he stepped down and carved a new career as a non-executive director of various companies. He was an adviser to Tony Blair on competitiveness.